Morgan Joseph initiates TKLC with a Buy and $27.50 tgt. Firm expects solid signaling rev growth driven by growth in wireless traffic, int'l expansion, and share gains combined with accelerating VoIP switching growth. Also, firm notes that on Aug 3, the co announced it will exercise its call option to buy the remaining 48% of its Santera subsidiary, which will provide improved transparency into the momentum of the business.

Ah, the pullback that everybody seemingly wanted finally arrived this week. That all three major indices pulled back around 1% yesterday is a good start to shaking out some weak-handed longs and bringing in some new short-sellers.

But it was only a start. It doesn't take a brain surgeon to look at a daily chart of either the S&P 500 or the Nasdaq and determine that we're still very much extended. Of course, that same surgeon would have been diagnosing overextension since the middle of May as this rally has hardly taken a breath, much less a breather, since it launched on May 1. So, yeah, we're still overextended. Has that interpretation of market action helped anyone make a dollar this summer? No. Is it likely to start?

At some point this market really will pull back and relieve itself of this long-time overextension, and then we'll all be able to pat each other on the back and talk about how we knew it was only a matter of time. In the meantime, the few longs who have ignored the overextension have likely generated some nice returns.

This discussion underscores why technical analysis can be so controversial. Overextension is purely a technical analysis term. And it hasn't mattered. But it will at some point. To be sure though, the same can be said of fundamental analysis. Earnings power and growth and valuation sometimes don't matter. Until they do.

All that said, the action earlier this week -- when Microsoft (MSFT:Nasdaq) ran more than 3% two days in a row, and the Nasdaq rallied more than 1% to new multiyear highs Tuesday -- certainly looked and felt like a blowoff top. There was a good bit of short capitulation, and also many a long-only money manager who finally embraced the rally by buying into the strength. Regardless of the sentiment measurements such as the II indicating that sentiment is not overly bullish, I do think sentiment did make a bit of a turn with that blow off top. And I think we're in for more near-term weakness.

Payrolls and other macroeconomic numbers look mostly market friendly, but the Treasuries are selling off on the jobs news and the higher rates that such a selloff brings has made the folks trading futures take them down just a little bit. Oil's above $62 a barrel and gold's recent action has put it back on many a trader's radar. It might be a quiet summer Friday for most of the world, but Wall Street's rocking. Let's get it started.